Return of Trump also brings Benelux opportunities

Donald Trump's new reign will have significant impact on the economy of the Benelux countries. The U.S. is the most important trading partner outside Europe for both Belgium and the Netherlands (export value Netherlands approximately €50 billion, for Belgium approximately €30 billion).

Many measures of the new administration are not yet known but it is certain that the policy will often be controversial and aimed at protectionism and reindustrialization of American business (at the expense of sustainability). Besides challenges mentioned in our previous article, we also see opportunities for Dutch and Belgian companies.

Especially promising are sectors that align with U.S. industrial policy and stimulate economic growth. Think of Dutch tech companies (with ASML in the lead) and Belgian chemical and pharma companies. This is certainly not just about high-tech and sustainable industry, because characteristic of Trump's industrial policy is the emphasis on precisely traditional industries ("Drill baby drill"). With his support for non-green sectors such as oil, gas and mining and other "old" industries, expertise and technology from the Benelux can certainly be desirable as well.

In addition, Trump's seem set to offer tax breaks to foreign companies with branches in the US. The extension of the Tax Cuts and Jobs Act and new tax cuts may provide higher profit margins for companies operating in the US. Belgian and Dutch multinationals with their own companies in the U.S. can strengthen their position and benefit from a more favorable tax environment.

Of course, the increase in import tariffs has a negative impact on European companies. Trump wants to initially increase tariffs on Chinese goods to 25% and on other imported goods (excluding Canada, Mexico and essential products) to 5%. This will cost $135 billion in exports globally, according to our research department, which is equivalent to 4% of expected global export growth in 2025-2026. In a severe scenario, import tariffs could reach 60% for China and 10% for other countries, putting $510 billion in exports at risk and reducing global growth by -0.8 percentage points.

What may be mitigating in this regard is that Trump's economic policies are likely to push up the dollar exchange rate (due in part to rising interest rates). This makes the products of exporters in the rest of the world cheaper for the U.S. market. Strong exporting countries like the Netherlands and Belgium could benefit.

A possible escalating conflict between the U.S. and China also offers Benelux companies opportunities. The US wants to reduce its dependence on Chinese goods. This offers Dutch and Belgian companies an opening to offer high-quality alternatives. Think especially of sectors such as electronics, chemicals and machinery. Trump's defense policy, which calls on NATO member states to contribute more to their own security, also offers opportunities.

The economic impact of Trump's presidency on Benelux countries is complex and multifaceted. Higher trade tariffs and stricter immigration policies are bad for export-oriented sectors, but thanks to reforms and reindustrialization, there are certainly also opportunities for high-quality, innovative companies. The next few years will determine how well Benelux businesses are able to position themselves within the new economic reality led by Trump. It is crucial that companies adapt. Among other things, by diversifying their markets, controlling costs and investing in innovation. Furthermore, strategic cooperation within EU is essential to respond to the challenges and also the opportunities arising from the new economic situation created by Trump.